This 'Shark' Turned $40 Into A $6B Business

Chris Ronzio (00:39):

Welcome back everyone. I'm Chris Ronzio and this is the Fastest Growing Companies. Now, usually I have founders on here and ask them to introduce themselves and their business, but today we've got Daymond, John. The man that really needs no introduction.

Daymond John (00:52):

Thanks for having me.

What's up. Thank you for the hat, by the way.

Daymond John (00:55):

Oh, you kind of took it from me.

Chris Ronzio (00:57):

I'm going to be rocking it all day. I appreciate it. So this show is all about the infrastructure of growing businesses and whether someone's going from one person to five or 10 people, or they've got 10 or 15, and they're going to a hundred. There is a lot of change that happens in a company and in their mindset in order to make that happen. Absolutely. So you've got an interesting lens on this kind of growth because you see thousands of companies, as you think back when you're sitting in the tank and you've got an entrepreneur pitching you, how do you first even evaluate if they're growing enough that they have a real business?

Daymond John (01:35):

You see the demand of products that they have not been able to supply, or the fact that they're running through their inventory quite quickly. And you can have either one, you can have somebody who's saying, I don't even want to open up the flood gates because I'll be drinking out of a water hose, right? Or you'll have somebody saying, every time I put something out or I bring in a certain amount of inventory, it's gone.

Chris Ronzio (01:56):

So they don't have a sales problem, like a sales and marketing problem.

Daymond John (02:01):

Sales cures all problems.

Chris Ronzio (02:03):

Yeah. And so if you see that there's that sales demand that's to you, the trigger that I can invest in this business, they're investible.

Daymond John (02:10):

It depends, Right? You can also get hurt too. A lot of people come in there and say, well, we want to be on Walmart and Target. Well, they put just so many out of business, or they have put in business because they have a very specific requirement or what needs to be done. And you may say, well, let me take an, all the sales, first of all, right? All of a sudden you don't deliver in a certain amount of time. In my business, I couldn't deliver winter goods in the winter. I had to deliver them before the winter was coming. The demand is one thing, but then structure and foundation and processes is another thing, because you can have a lot of sales and you know, you won't be able to take it. You will have heavy overturn with people. You can't source people the right way. Imagine if you're growing to the point where you're, you're putting on 10 people a month, that is 120 people a year, that's 120 personalities a year. And you have to put together everybody on how things work. I can barely tell you something. You tell somebody else and it gets executed the same exact way. Right? So imagine doing that. It's a lot of things that go into it.

Chris Ronzio (03:12):

When you decide that, yes, this business is investible. You're taking a gamble on the entrepreneur, on the demand that they say that they have. What are the couple of KPIs that you start to look for to say, you know, like they have huge growth, potential? Is it that it's a big market? Is it that they... what are you thinking about?

Daymond John (03:31):

It's never about being a big market because every market is big. I don't care what it is. The worst thing you could say is this is a $50 billion market. If I get 1% of that market, I'm going to be wealthy. Well, the bankruptcy market's a trillion dollar market. You might get 1% of that, right? So it's never about the size of the market. It's about how quickly have they been growing? How quickly are they been able to overturn? Where is the demand coming from? Is it real demand? And do they know their customer? Do they know every single thing about their customer? And can they replicate that same model in different cities, states, of course online, different demo groups. How can you blow up the company? Remember, I always say there's only three ways to deal with a customer. There is acquiring a new one, upselling a current one and making one buy more frequently. Before you try to go out and acquire new one, how are you upselling the current one or making one by more frequent? How are you basically supersizing everybody's fries.

Chris Ronzio (04:23):

When you think about buying more frequently, is it expanding products? Is that you've got more skews. I know you did that with FUBU, but there's also a benefit to being a niche type company, right? You've got a certain thing and you just focus and you just do this. So which side do you...

Daymond John (04:37):

There's no one way to do it? Cause if you look at it, Under Armour and my company, we started at the same exact year. We were both highlighted in the film, Any Given Sunday, LL cool J was wearing FUBU, someone else's wearing Under Armour. Kevin and my buddy, he decided to concentrate on one type of shirt for 10 years, period. Now he may have made it other colors. He made supersized people's fries by making another color and making a long sleeve short sleeve. One really specific shirt. He's going to do $3 or $4 billion this year. FUBU's not, right. But on the way up, I did way more than him the first couple of years, because I added a hat, a Jean, a t-shirt, a jacket, a boot, bags, ladies, whatever the case was. So there's no one way to get to the finish line. It's just one of the processes that you put in place to get to the finish line.

Chris Ronzio (05:26):

What do you think is more common, I guess? As your shark tank entrepreneurs are trying to scale, are they adding expansion products or are they just staying focused and selling more through more channels?

Daymond John (05:38):

The staying focused. They're selling more, not often through more channels, they're selling more through the same channels, but they're getting the customer to be the biggest ambassador. and they're supersizing fries. I love to talk about Bomba's success. Bomba's success is that it's just socks at the end of the day. But as they educate people about these socks, that every time they sell a pair, they give away a pair to the homeless. Well, now you're having people buy more frequently because when they know they bought a pair from themselves, they know they've helped somebody. Well, now they're going to buy 20 pairs for Christmas, for their friends and share with their friends that they helped somebody, right? So there's a whole different way, of course, underwear and t-shirts are put back and added to it. But before they did that expansion, they made sure the communication was very clear that if you buy for me, you're helping somebody. And if you buy for somebody else, all of you are helping somebody else.

Chris Ronzio (06:30):

They have a story that's so easy to articulate. Not every business has that. When you were starting out, is that something that you put a ton of energy into, like this is our story. It's easy to share.

Daymond John (06:40):

Very clear. Our story was this, FUBU, for us by us. A lot of people thought it was only about a color when it's not, I always say, never become the thing you're fighting against, but then other people will realize it was about a culture. And then other people started to take it for whatever their FUBU, for us by us was. In Korea and Asia FUBU is massively big and skate market. In America it's the hip hop market, right? In America, they wore them baggy. In Europe, they wore very, uh, tight fitting. In Japan and other Asian countries, they wore it almost as outfits where they would dress themselves up as kind of like, um, characters. Right. And in America they wanted to switch it back and forth. I want to make sure that my Jersey matches my Nike. Whatever the case was, the FUBU was interpreted a certain way. Also in the creation of the name, what is FUBU? Was it Italian? Is it the po po platter? You know, what is it? What is a FUBU? Right? So there was a lot of different ways that we made sure that they took it and made it their own. And those who are buying, whether it's Bomba's socks, or whether they're buying Tom's Shoes or they're buying the lotions, they have this own, their own community to say, this is how this community has embraced it.

Chris Ronzio (07:47):

I talk to a lot of founders that just want to outsource all their marketing. How do you talk to your founders about that? You know, if they're struggling with it and they say, I just want to hire an agency. What's the right way to do that as an entrepreneur?

Daymond John (08:01):

Well, you got to kiss a lot of frogs, but I think that you have to take a lot of those things internally and you have to try them. A marketing agency, the best person in the marketing is you, that they could sell something. You're supposed to know your business very well. Nobody's supposed to know your customer better than you are. Nobody's supposed to know how to communicate with your customer better than you are. And that's something that you allow another company to do only. And you decide, well, this is not an area that I want to grow in. Well, if they decide that they want to hold you hostage, then what happens? You got to either pay them more or they leave. And then they leave and you gotta go and search for more people. Sourcing marketing, I believe that's something that you should really have a good hand on the pulse when it comes to that. Social media conversion communications, you don't want to be the victim of your own success because you've paid for somebody else to do it.

Chris Ronzio (08:46):

Yeah. It makes sense. And it's, and that's how we've approached it. And you've met Jonathan. Jonathan's here in the, behind the camera, but we always felt like we have that story in house. And if we can't get good at sharing it, it's hard to hire someone else to propel that message. So a lot of the founders that come on the show and that pitch that you invest in are one or two person operations, right? So when is it time for that person to stop making the product or stop doing the service? What is that time period between when you invest and when you coach them into having a team.

Daymond John (09:18):

When again, sales can manage these things. They'll, you know, some founders decided to work a day job and then work a night job and do it for a long period of time. But when sales can come in, that you can bring in some way to replicate what you do. You know, that's the person that you should be hiring the person that can do what you do, because at least, you know, what that person's job is. And that they suck at it, you know not to hire them. And if they're a rockstar, you know, at least you can leave that. So you can go and start managing other the areas of the business or outsourcing of the areas of the business. And that's my theory. Other people come in and say, well, you need to know where your weaknesses are. And you need to hire the people that are good in the areas you are weak at.

Yeah, you can, but are there ways that you can have triggers set forth in hiring them. Three month tests, two month tests, one month test. Hit this certain level of stuff like that. So you both can kind of learn how you work together and learn where the brand is going collectively. The brand and your company and your product or service will go various ways that you will never expect it to go. Um, but are you open to that anticipation and being able to deliver on that? The last thing you want is a customer who is seeking you out. And you're saying, I don't want you, I don't care for you, or I don't care about you.

Chris Ronzio (10:29):

When you think about your portfolio and all these companies, there's some like Bombus that have scaled dramatically. And there's others that may be, have maintained a great lifestyle business and have provided for their family. So is there a theme to the ones that really tend to take off that have, you know, 10, 50, a hundred people?

Daymond John (10:47):

Yeah. The ones that tended to take off are not egotistical. They're servant leaders. They serve their staff, they serve their customers. They serve the market. They take actionable steps. They act, learn, and then they repeat and they see, where did we learn from what went on? They allow their team to be people who are they hired to be to lead. They keep educating themselves and where the market goes. And they usually laser focus on exactly what they're doing. And they know their why, why they're serving. I tend to find the ones that fail are the ones that feel, oh, the shark is going to solve all my problems. Well the shark can solve all your problems, then FUBU would be called Nike? Right? And by the way, this is your problem. I'm supposed to help you with it, right? They're the ones who are egotistical.

They feel that being a leader is somebody who can point to everybody and say, you get me coffee, you're hired and you're fired, when no, you're the person at the office that's the last to leave. You are the last getting paid, and you thank everybody for your success and blame only one person for your failure. And a lot of those are the ones that fail and they go by the wayside. The other ones are the ones that constantly take inventory. And again, uh, they, they keep serving. They keep listening to the customers. They know a customer complaint is still an investment in the company.

Chris Ronzio (11:59):

Yeah. So, the ones that are egotistical and they don't show up and they're not willing to get their hands dirty. I mean, that sounds like a cultural thing, right? It is the building blocks of culture to have an early team that shows that work ethic and demonstrates that. So is there anything that you suggest in terms of building blocks of culture, intentionality of culture?

Daymond John (12:20):

Getting to know the people that work for me and what is their why. You should be able to describe yourself in two to five words, right? Um, because it's like I say, it's Apple thing, different Nike, just do it, FUBU, for us by us. And if you can describe yourself in two to five words, then you don't have a compass to take you where you're going and you also leave it up to other people to interpret, but also ask your staff, what is the two to five words? You'll find people that are very passionate about charitable or social issues, and they can still walk and chew bubble gum at the same time. And they'll bring that passion into your company. You look at some companies like 3M or Google, where they say 20% of the work you do is not supposed to be spent on anything related to this company.

Hence those people go out and work on things that are fulfilling to them. They come back and all of a sudden you find Gmail. You find Google maps out of these people who are passionate about bringing something back to the team. So if your team is the most valuable asset you have, to create a culture is to ask them, what do you want to accomplish through here? Then put it as the criteria and say, this is what our theme, and this is what, who we are and follow through with that. It's hard to lead people if all they're listening to is from the top down, right? Because then you and I may go well, we're not doing that this year. And Tom is going from here. And you know, Susan's gone from here. We're not doing that. If it comes from within the team they go, this is what we believe in, you know?

(13:44):

That shows just what I find is consistent. And I had to learn it the hard way. I had to get better at understanding. As I was growing my company, I didn't realize that at every 50 people, we needed one HR person. After you get to 120, 150 people in the company, you stop knowing other people's names. Right. I had to start learning that the hard way. And that's probably some of the reasons why FUBU had slowed down at some point. But, thank God I was dumb enough or smart enough to figure it out after that and go, wait a minute. What am I doing here? And we started to correct that curve that was going down because the lack of culture.

Chris Ronzio (14:19):

Culture is important. And I mean, it's something that a lot of the founders I interview talk about, it's a mistake that they made. You know, I didn't think about it until we got to a certain size. I wish I had done it sooner. Is there like a cadence of check-ins or something you recommend to be in tune with your people and not let it slip?

Daymond John (14:36):

No. It's to know that you don't know what you don't know and it's to go out and get the proper mentors. For somebody who is running into it and opening a business, you first have a desire to feel like something's not being done correctly in the world, and I can make a better mouse trap, where I can transition a person from this place to this place in their life. But if you and I, we happened to get into sports and it happens to be whatever, a more male dominated sport. When we start bringing in people of other genders, other ages, other ethnic backgrounds, we were just so busy trying to get the business together. I mean, I think that's what you've seen happen with the Uber's of the world, where it was just a boys club at first. And as it grew, you have to have people around you who are saying, are we making sure we're hacking ourselves?

Are we making sure that we're serving? And we look like the people that we serve. I don't think Uber was a, you know, a bunch of everybody was just white males taking Uber. I don't believe that was the case. And as you started to look and see the people that, that you are serving, do you bring in the people that also can help you serve those people? And it's not only the right thing to do, but it's the most profitable thing to do. You know, the reason I exist is because the GAP ended up spending $30 million, airing the ad with LL cool J and LL wore that hat in the ad and said, FUBU, for us by us on the low. In the ad. And now they're trying to hit the hip hop market, but unfortunately they spent 30 to $40 million on a television show, on a commercial that they didn't pull down for five weeks because nobody in the office listened to hip hop.

(16:04):

That's why I'm here. Right? So I think their ignorance was great for me. However, for them it hurt at that point. Again, it goes back to saying, if you're going to serve people, make sure that you look like the people you serve and always hack yourself. I know that even I can still do better after the whole George Floyd thing happened. I talked to my staff and I realized that out of our 20 interns, only two of them were people of color. Why? Was it that I did not want people that look like me to be an intern? No, but I was sourcing from only really specialized schools and high-end schools that of course, minorities may not have had the ability to attend that school because maybe they didn't have the funding or access to anything else. I had to improve myself. You have to constantly hack yourself.

Chris Ronzio (16:50):

Yeah. I love that. When you talked about the initial hacking as like trying to get rid of the job that you do in the business. So you can start to spread out and focus on these other areas. A lot of people just struggle with that idea of handing things off and they maintain their task forever. Is that something you struggled with? Or were you from the beginning, like what can I not do?

Daymond John (17:11):

No, I never struggled that. Cause I realized that as I look out at companies that have 10 and 20 and 50,000 employees, and they've been around for a hundred years, somebody had to let go of the reigns. I look at all the ones that are doing things, then not the ones who are not doing things. And I understand that there's the world of the Steve jobs who were micromanagers in certain areas, but there was some way or another, they figured it out to have other people help and to do things. And I know that I don't know everything. I believe that scalability is possible. We see it all around us and why can't whoever the founder is listening us right now. Why can't that person be the scalable person? You think that nobody else in the world can do your job? Nobody else, really? Well that's pretty hard for me to believe.

Chris Ronzio (18:00):

Yeah so, someone else in the world can do your job. I ask everyone at the end of the interviews, you know, what's like a page in their playbook that they can share as our listeners are building their own. So if there's one thing that would summarize the ability to scale, what would you say it is?

Daymond John (18:17):

The ability to scale is to be able to trust other people and know that they can do your job or you license things out and you will have a lot of failures, but you have to be very clear on the deliverables. You have to... on your expectations. And sometimes it won't work, but don't get discouraged by that and say, well, this is never going to be possible. Right? So that's the way that I've learned to scale businesses, by licensing out things and or yes, hiring agencies. But generally, we can give them the DNA and say, all right, I have two in-house people or three in-house people we're going to oversee you. And I know you have a hundred people to do this job, but here's our requirements. And if you can't deliver on these requirements then we're moving on in this short period of time, but at least I was able to give them the roadmap.

And that's what you all supposed to do with your customer. You're supposed to let them know who you are as a company and let them be able to go and be the smartest person at the water cooler Monday morning, by saying, do you know what FUBU is? Do you know what Apple is? You know, Apple is very simple, right? Listen, think different. You see, you said, I'm not going to talk about how much more memory or how much more we have in this computer. Everybody has that. We're going to make sure that you think different and we're going to take the old MP3 player. And we're going to make sure that we save you time. Now you don't gotta run around with cassettes and CDs. We're gonna put all that. By the way, when you go into a store, people are going to have nose rings, this big. But they're gonna be some of the smartest people that you ever saw in your life where you think they're going to be raving somewhere.

(19:41):

No, they think different, yet it's easy to tell people's story. Nike is just do it simple as that. They will take on some of the most challenging social campaigns with social issues and all of a sudden, why do they always look like a rockstar at the end? When at first everybody's like, the stock will go down. No, no, no, no, no. We just do it. We get it. We know we want to be on the right side of this. We just do it. So, you know, it's really, it boils down to, it's not, it's not too complicated, you know?

Chris Ronzio (20:08):

Develop the DNA for who you are for what you do, learn the specialties in-house but stay true to your values and then delegate and trust other people and watch your business expand. I love the tip. Thank you so much. Damon, everyone can watch Shark Tank. They can see you on Instagram. Is there anything that you want people to check out at the end of this?

Daymond John (20:27):

I think they should just check out Trainual and what we're doing. Cause I think this is absolutely amazing. I wish this was around when I was creating my company. I think is extremely, extremely valuable. It's going to save time, energy and let you go and do the things that you can concentrate on the most. And the only thing we can ever sell people in this world that they'll never get back is time. And I think that's critical

Chris Ronzio (20:46):

And that's what it's all about saving time. So I hope the tips today help you save time and earn extra time in your business. Thank you for spending your time here with us. Again. This is the Fastest Growing Companies. Daymond. Thanks so much.

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